Refinance and purchase applications skyrocket to new weekly high

Off-the-chart borrower demand has continued into November, with applications for both home purchases and refinances increasing on a weekly and annual basis, according to the Mortgage Bankers Association.

Data from MBA’s latest survey showed that mortgage applications rose 3.9% on a seasonally adjusted basis from the previous week. On an unadjusted basis, mortgage loan application volume went up 3% week over week.

Joel Kan, associate vice president of industry and economic forecasting at MBA, said that another decline in weekly mortgage rates spurred the uptick in applications.

“Thirty-year (30 year) fixed mortgage rates dropped seven basis points to 2.92%, another record low in MBA’s survey. Weekly mortgage rate volatility has emerged again, as markets respond to fiscal policy uncertainty and a resurgence in COVID-19 cases around the country,” he said.

The refinance index recorded a 5% week-over-week gain and was 79% than the same week a year ago. The seasonally adjusted purchase index shot up 4%, while the unadjusted purchase index dwindled 2% from the week prior and was 19% higher than the same week in 2019.

“The ongoing refinance wave has continued into November,” Kan said. “Both the refinance index and the share of refinance applications were at their highest levels since April, as another week of lower rates drew more conventional loan borrowers into the market.”     

Of total applications, the refinance share of mortgage activity climbed from 69.8% to 71.1%. The adjustable-rate mortgage (ARM) share of activity held steady at 1.9%, while the FHA share fell from 10.5% to 10%.

The VA share also posted a weekly decline, down from 12.1% to 11.8% the previous week. The USDA share of total applications waned from 0.5% to 0.4%.

“Amidst strong competition for a limited supply of homes for sale, as well as rapidly increasing home prices, purchase applications increased for both conventional and government borrowers. Furthermore, purchase activity has surpassed year-ago levels for over six months,” Kan said.